The importance of non-profit organisations as providers of social
services has grown in many countries during the past 15 to 20 years as
governments have contracted out direct social service provision.
Arguments in favour of social service provision by the non-profit sector can be grouped into three categories: effectiveness, cost and
responsiveness to community needs -- the last of which is the focus of
this paper. If claims of greater responsiveness in non-profit
organisations are valid, it might be expected that such responsiveness
would be manifested in a high level of stakeholder awareness and
engagement on the part of non-profit organisations. Stakeholder theory (developed in the for-profit sector) is used here in the case study of a
small non-profit organisation, both to explore the issue of stakeholder
awareness and engagement, and to test the applicability of stakeholder
theory to the non-profit sector. Key findings of the study were:

* Stakeholder theory could be meaningfully applied to the
non-profit organisation under study.

* The organisation had a strong sense of obligation to a number of
groups it had identified as sharing its objectives, although the concept
stakeholder was not used by the organisation.

* It was possible to assess the organisation's level of
responsiveness to the various stakeholder groups and the factors that
impinged on this level of responsiveness.

Implications for accountability in non-profit organisations are
also addressed.

INTRODUCTION

This paper is concerned with responsiveness and accountability in
non-profit organisations. Non-profit organisations deliver a wide range
of services including sport, arts and culture, and social services. In
particular, their importance in social service delivery has grown.

Forms of selective, individualised welfare assistance delivered through
quasi-markets are a defining characteristic of the new welfare state model
emerging in some countries such as Australia, New Zealand and the USA.
(Considine 2000:292)

Changes in our welfare systems have seen governments choosing to
exit from direct service provision, contracting instead to a growing
number of non-profit organisations. Some commentators explain this with
reference to a change in the perceived role and purpose of government.
Caragata (1998), a New Zealander writing on the topic, argues that:

The principle reason for [the] disillusionment with big government is that,
if it grows beyond a certain point, the public sector reduces welfare
rather than increases it. (p.279)

Whether or not one agrees with Caragata's analysis, arguably a
perception has developed that social services delivered by the
non-profit sector are superior to services delivered by government.
Arguments for non-governmental provision of social services can usefully
be grouped into three categories: effectiveness, cost, and
community-centredness or responsiveness, the last of which is the
concern of this paper.

For simplicity, this paper uses the term "responsiveness"
to characterise the set of values and beliefs that perceive non-profit
organisations as more representative of community needs and aspirations than other forms of organisation.

It is not obvious how the non-profit organisational form per se
should lead to more responsive services. Intuitively it seems likely
that the responsiveness of non-profit organisations should be particular
to the organisation in question. Factors such as how the organisation is
governed and its attitude to community participation would seem to be
crucial. Considine (2000) states that a vigorous non-government social
services sector may contribute to greater innovation and greater
responsiveness to the needs of groups with special needs. However,
empirical evidence in this area is very sparse.

This paper does not attempt to address the general question as to
whether non-profit organisations are more responsive to communities than
other kinds of organisations. Rather it seeks to address how we would
know whether an organisation is responsive. Building on stakeholder
theory the paper argues that if non-profit organisations are responsive
this ought to be manifested in how they manage relationships with their
stakeholders. Before developing these ideas further, however, a brief
introduction to stakeholder theory is presented below.

STAKEHOLDER THEORY

Freeman (1984) is widely credited as being the founder of
stakeholder theory, although he points out that many of the key concepts
go back to the 1960s. There are today a large number of respected
writers on the topic, one of the better known being Max Clarkson.
Clarkson (1995) defines stakeholders in the following way:

Stakeholders are persons or groups that have, or claim, ownership, rights,
or interests in a corporation and its activities, past, present, or future.
Such claimed rights or interests are the result of transactions with, or
actions taken by, the corporation, and may be legal or moral, individual or
collective. Stakeholders with similar interests, claims, or rights can be
classified as belonging to the same group: employees, shareholders,
customers and so on. (p. 106)

Notable in this definition is Clarkson's view that stakeholder
interests in a firm may be based on moral grounds as well as legal ones.
Whether or not a particular stakeholder has legal rights, the firm may
have obligations to them based on natural justice. It may also be good
business practice to maintain good relationships with stakeholders. This
issue is discussed later.

Clarkson's paper makes a distinction between stakeholder
issues and social issues. While an organisation may have
responsibilities to its stakeholders, wider social issues, in
Clarkson's eyes, are more properly the business of government.
Social issues can generally be recognised by the fact that government
chooses to regulate for them. Building on this idea, Clarkson argues
that it is more meaningful to discuss corporate responsiveness to
stakeholders rather than corporate social responsibility.

So why should organisations be responsive to their stakeholders?
Donaldson and Preston (1995) argue that there are two possible
perspectives on this, the first being normative, the second
instrumental. From a normative perspective, organisations should be
responsive to their stakeholders because it is intrinsically desirable
that they be so. Normatively based stakeholder theory is based on
ethical principles. In some cases it takes the form of codes of ethics (see Samuels et al. 1996, Cadbury 1998, 1999).

The normative approach can be contrasted with the instrumental
approach, which argues that it is good business for organisations to be
responsive to their stakeholders. A useful statement of this approach
can be found in McMillan and Downing (1999), who argue that the bulk of
the value of modern companies is goodwill. Or, expressed another way,
the value of a company is determined by the quality of its
relationships.

Until recently there was little empirical evidence about the
relationship between stakeholder relationships and the financial
performance of companies. However, in the past two to three years a
number of articles have been published which suggest that positive
stakeholder relationships can contribute to improved financial
performance -- Agle et al. (1999) and Waddock and Graves (1997a, 1997b)
are three examples. Waddock and Graves explore whether responsiveness to
stakeholders leads to improved company performance or whether the
reverse applies -- i.e. companies with plentiful resources can afford to
be more responsive to stakeholders. They found that both relationships
apply, suggesting that the relationship between stakeholder
relationships and company financial performance is complex. Waddock and
Graves suggest that the relationship between firm financial performance
and stakeholder relationships is mediated by a third factor, which is
the quality of an organisation's management.

To summarise, from an instrumental stakeholder perspective, an
organisation, whether it is for-profit or non-profit, public or private,
can be seen as a network of individuals and groups who choose to
cooperate for mutual benefit. The role of governance in organisations is
to ensure that the maximum possible value is generated by an
organisation for the benefit of all stakeholders.

COMMUNITY RESPONSIVENESS IN NON-PROFIT ORGANISATIONS

The discussion above draws on published material about the
for-profit sector because there is a lack of published literature on
stakeholder theory as applied to non-profit organisations. Nevertheless
it is the author's view that stakeholder theory is relevant to all
organisations. This paper suggests that stakeholder theory can be used
as a conceptual tool for understanding responsiveness in non-profit
organisations.

This paper takes the position that the relationship that non-profit
organisations have with their communities is akin to the relationship
that for-profit organisations have with their shareholders. Just as
for-profit organisations are accountable to the people that own them,
non-profit organisations ought to be accountable to the communities that
support them.

Herzlinger (1994, 1996) explores accountability of non-profit
organisations by proposing a code of best practice for non-profit
boards. Its key elements are disclosure, analysis, dissemination and
sanctions.

* Disclosure -- Non-profit organisations are generally not subject
to the same financial reporting requirements as for-profit
organisations. However, since the enactment of The Public Finance Act
1989, New Zealand government organisations are subject to these
requirements.

* Analysis -- In the absence of adequate performance data, it is
very difficult for the performance of non-profit organisations to be
assessed.

The little information that does exist about the performance of non-profits
and governments is rarely analysed. Analysis is difficult because
counterparts to the financial ratios and other techniques widely used to
evaluate business performance barely exist for non-profits and governments.
(Herzlinger 1996:101)

* Dissemination -- Accountability requires transparency.
Performance information needs to be freely available to the persons to
whom the organisation is accountable, but "no clearinghouse exists
for disseminating material information about nonprofits"
(ibid.:102).

* Sanctions -- In the absence of externally imposed sanctions that
require accountability from non-profit organisations performance will
not improve.

Publicly owned companies that fail to disclose, analyse and disseminate
required information face sanctions by the SEC [Securities and Exchange
Commission in the United States] ... No comparable sanctions exist for
nonprofits. (ibid.:102)

Herzlinger's model focuses on financial accountability of
non-profit organisations and draws the conclusion that the formal
requirements for financial accountability in nonprofit organisations are
inadequate. While not explicitly stated, Herzlinger's analysis
suggests that governments ought to take action to impose more stringent
financial accountability processes on non-profit organisations. This may
well be a good idea, but Herzlinger's analysis is too narrow --
financial accountability is just one of a variety of forms that
accountability can take.

A second gap in Herzlinger's analysis is that it does not
consider why or to whom nonprofit organisations ought to be accountable.
Crucial issues concerning who has a stake in non-profit organisations
and how those people should participate in governing those organisations
are not addressed.

As already discussed, arguments in favour of the non-profit
organisational form are based on effectiveness, cost and responsiveness.
Where claims of responsiveness to the community are made, non-profit
organisations should be able to demonstrate that they have a
relationship with the community that provides for community input. This
is likely to require more than transparent reporting of financial
information. Community input into non-profit organisations could take a
variety of forms, such as:

* Participation of stakeholders in management and/or governance of
the organisation;

* Reporting to stakeholders on quality and effectiveness of service
provision; and

* Reporting to donors and/or funders on what the
organisation's resources are used for and the effectiveness of the
services provided.

A review of the literature has found very little written on these
wider accountability issues in non-profit organisations.

To explore in more detail the applicability of stakeholder theory
to accountability and responsiveness in non-profit organisations, the
author undertook a case study of how one non-profit organisation manages
its relationships with its stakeholders. The study was exploratory in
scope and aimed to develop questions for further work rather than
forming firm conclusions about responsiveness in the non-profit sector
as a whole.

CASE STUDY

As discussed in the introduction, this paper asks the question,
"How would we assess the responsiveness of a non-profit
organisation?" The paper hypothesises that a useful model for
assessing responsiveness in non-profit organisations is stakeholder
theory.

The Wellington Violence Intervention Programmes Incorporated (VIP)
is an incorporated society whose aim, according to its constitution, is
"to promote and work towards the elimination of violence in New
Zealand society". It lists as its key principles:

* Family violence is a crime.

* The safety of women and children is paramount.

* Violence is unacceptable.

* VIP is committed to long-term solutions for stopping violence.

* A coordinated interagency approach to stopping family violence
works best.

* VIP seeks to uphold the Treaty of Waitangi.

VIP seeks to achieve its aims through providing the following
services:

* Assessment and group education programmes for men who are violent
toward their partners;

* Support groups and a referral service for the female victims of
family violence; and

* Provision of education and training on family violence issues for
community groups and agencies.

Contact was made with the organisation through a friendship with a
staff member. The researcher was permitted access to organisational
documents and was able to interview agency staff and key stakeholders.

Organisational Analysis

VIP applies feminist and holistic/social systems approaches to
understanding its core business. These approaches have led to it
identifying a number of groups and organisations that it considers have
an interest in its business. While the term "stakeholder" is
not used in respect of these groups and organisations, the manner in
which they have been identified is consistent with a stakeholder
approach. VIP employs various mechanisms to manage its relationships
with these stakeholders. These mechanisms include participation in
VIP's governance, monthly stakeholder meetings, and personal
contact. The level of influence that the various stakeholders have
varies, reflecting their perceived importance to VIP.

An analysis of an organisation based on the stakeholder literature
should consider who contributes value to the organisation and who stands
to benefit from achievement of the organisation's objectives. A
typical list of stakeholders applicable to a for-profit organisation
might include customers, suppliers, shareholders and employees.

Applying this approach, a list of stakeholders was developed for
VIP:

* Women and children;

* Partner agencies;

* Funders;

* Men who attend the programme;

* Programme staff and Incorporated Society members; and

* Society as a whole.

Women and Children

Women and children are stakeholders in VIP in two senses:

* As the community of women and children who have suffered, or may
suffer, violence at the hands of men; and

* As the partners and children of men on the programme.

VIP's responses to the needs of these two groups are
considered in turn.

VIP has clearly established wider aspirations for itself than
simply providing group programmes aimed at stopping violence. The aim in
the constitution "to promote and work toward the elimination of
violence in New Zealand Society" has a focus on social change. It
recognises that family violence occurs within a social context that
frequently tolerates or ignores it. It is this statement of a wider
perspective that acknowledges women and children in a wider sense as
being stakeholders.

This group of stakeholders is given a voice at VIP through the
participation of Women's Refuge and Help Foundation on VIP's
governing board. These organisations have a very significant role at VIP
and are in a position to wield considerable influence. To a large
extent, the degree to which they exercise this influence in the
interests of all women and children depends upon the degree to which
they themselves have an active engagement with the wider community of
women. This was not assessed by the study. It is apparent that VIP
relies very heavily on these organisations for input as it does not have
mechanisms of its own for engaging with the wider community of women. It
could be argued, however, that it should not do so, as there are
women's organisations that have identified this area as their core
business.

VIP has taken particular care to ensure that the perspective of
partners and family members is an integral focus for the programme. All
partners are contacted and offered support. Their views are heard and
are influential in the therapy their partners receive. There are sound
clinical reasons for this approach. The problem of family violence is
complex and multifaceted. An effective response to family violence also
needs to be multifaceted.

Clearly the most important measure of programme success is the
extent to which women and children are made safe. Regardless of changes
observed in men in the group therapy context, if women and children
continue to be unsafe then the programme is not working. In many ways,
the programme itself has been designed with their needs in mind.

Partner Agencies

"Partner agencies" is a category of stakeholder that is
unlikely to be applicable in most for-profit settings. However,
VIP's philosophical approach, the nature of stopping violence work,
and the characteristics of non-profit social service organisations,
dictate a need for interagency cooperation that might not be found in a
normal commercial environment.

VIP's constitution expresses a commitment to working in a
coordinated way across agencies to address family violence, taking the
view that, because family violence is a complex multifaceted social
problem, the most effective approaches to reducing family violence are
broad-based multi-agency approaches. Working in partnership with other
agencies is therefore an imperative for the organisation.

As already discussed, Women's Refuge, Help Foundation and the
Wellington Community Law Centre all participate in the governance of
VIP. This is an important role and gives these three agencies
considerable influence over VIP's governance and management. This
relationship is not a reciprocal one; VIP does not have a similar level
of influence over the governance and management of these partner
agencies. This makes VIP accountable to these partner agencies, but does
not make them accountable to VIP.

Relationships with other partner agencies are managed through
monthly meetings of an interagency group. This group, led by VIP,
comprises a number of agencies with a common interest in family
violence. The Police, the Department of Child, Youth and Family
Services, Women's Refuge, Barnados, Catholic Social Services,
Corrections and the Family Court are amongst those represented. All of
these agencies provide various services for perpetrators or victims of
family violence. The focus of the committee is less on accountability
and more on information sharing and mutual support.

Comments from VIP staff on the effectiveness of the interagency
committee varied. A key concern was the difficulty of getting some
agencies to actively participate. This was exacerbated by the existence
of other interagency forums in Wellington, and by the demands of agency
core business that restrict resources available for interagency liaison.
These comments highlight an issue for organisations in managing
relationships with stakeholders, i.e. that the benefits of maintaining
active stakeholder relationships must outweigh the resources expended in
doing so.

Another partner agency with which VIP has a special relationship is
the National Network of Stopping Violence Services, a national
collective of approximately 30 "stopping violence" service
providers. It has a code of ethics and a complaints procedure, and
provides a national complaints service. The National Network regularly
assesses programme providers for their compliance with the domestic
violence regulations and the Network's code of ethics. If the
performance of providers is found to be unsatisfactory, their membership
of the Network can be suspended or terminated. This, of course, can
jeopardise their registration under the domestic violence regulations
and lead to a loss of funding. Termination of Network membership is
infrequent. Nevertheless one member organisation had its membership
terminated in 2000.

Funders

VIP receives funding from three sources:

* The Department for Courts: 70% of clients in financial year
1999/2000 were referred either by the District Court or the Family
Court;

* Fees paid by self-referred clients: 22% of clients in financial
year 1999/2000 were self-referrals;

* The Department of Corrections: 8% of clients in financial year
1999/2000 were referred by Corrections. Corrections has given notice of
its intention to cease buying family violence services after 2000/01 and
replace them with services it provides itself.

Family violence services funded through the courts are covered by
the Domestic Violence Act 1995. The relevant aspects of the legislation
are not in the Act itself but in the Domestic Violence (Programmes)
Regulations 1996 issued pursuant to the Act. The regulations provide for
the registration of family violence service provider organisations
requiring a code of ethics, a complaints procedure, and continuing
education and peer supervision for staff. Where an organisation does not
have all these features it may belong to an appropriate national
organisation that does have them. In the case of VIP, it belongs to the
National Network of Stopping Violence Services, which has a code of
ethics and a complaints procedure.

The Regulations require that certain training and competency standards be met for registration under the Act. The Department for
Courts contract with VIP specifies that the "contract is entirely
conditional on you [VIP] retaining approval status ... throughout the
term of the contract".

All men referred by Corrections to the programme are referred on an
individual basis by their probation officer, and on completion of the
programme these clients complete an evaluation questionnaire on the
programme for their probation officer. These assist Corrections to make
decisions about further referrals. The results of questionnaires are not
made available to VIP.

It is difficult not to be impressed with the provider
accountability regime established by the Domestic Violence Act. As a
relatively recent piece of legislation it reflects our current
understanding of best practice in family violence services. The Act
appears to be very effective at protecting the interests of the
Department for Courts as the funder and the interests of court-mandated
referees as clients.

If the regime is to be faulted it is that it emphasises compliance
rather than dialogue. The Act does not lead naturally to a
customer-supplier relationship between VIP and the Department for
Courts. This almost certainly diminishes VIP's opportunity to
"fine tune" its programme for particular groups of clients,
and similarly reduces the ability of the Department for Courts to
request changes to the programme where such requests are not
specifically provided for by the Act, which seems hardly ideal. However,
the relationships have been dictated by government to meet the needs of
government and are not relationships in which VIP has any power.
Nevertheless they are relationships crucial to VIP's survival as an
organisation and considerable resources are expended addressing the
expectations of these stakeholders.

Men Who Attend the Programme

Programme attendees have a stakeholder interest in VIP as clients.
In addition, the 22% who pay fees have an interest as paying customers.
The enthusiastic participation of attendees is crucial to programme
success.

National research carried out by the Department for Courts and the
Department of Corrections (verbal report, unpublished) indicates that
clients of stopping violence programmes are generally satisfied with
both programme content and process. However, apart from questionnaires
completed by Corrections clients, the views of VIP's programme
attendees are not systematically sought. Informal feedback obviously
occurs, but systematic information on the experience of individuals on
either the men's or the partners' programme is not collected.
This lack of a formal feedback mechanism was discussed with VIP staff
interviewed for the case study. Most saw it as an issue that needed to
be addressed, but other more urgent priorities commanded attention.

In circumstances where funding from government departments is
crucial for a voluntary social service organisation's survival, it
is understandable if the organisation tends to perceive those
departments as its customers. In the writer's view there is a
degree to which this is the case for VIP. It often appeared that more
effort was expended on understanding and addressing the needs of funders
than the needs of programme clients. This is an entirely rational
approach to VIP's funding environment. However, in the
author's view, opportunities existed for understanding and
responding to the needs of programme clients that were not exploited.

VIP Staff and Incorporated Society Members

VIP has only two permanent salaried staff members. Most programme
staff members are employed on a contract basis. For most of these,
employment by VIP is not their main source of income. As already stated,
VIP is an incorporated society; and many of the people who choose to
work for VIP are also members of the Incorporated Society. A staff
member estimated VIP's membership at 30 members.

Programme staff have input into the management of VIP through two
mechanisms: regular meetings of clinical staff, and participation in the
membership. The latter is discussed in the next section.

Society as a Whole

Society as a whole was identified as a stakeholder in VIP by the
researcher using Carver and Carver's concept of moral ownership
(1996). Some might disagree with this approach, arguing that it is
stretching the boundaries of stakeholder theory to see all of society as
a stakeholder. However, the researcher considered that the statement
"the overall aim is to promote and work towards the elimination of
violence in New Zealand society" in VIP's constitution makes
wider society a stakeholder in VIP. Wider society also has an interest
in VIP by virtue of the fact that it provides public funding (via
government departments) to operate the programme.

The interests of society as a whole, and of VIP's membership,
are protected by the Incorporated Societies Act 1908. The main
accountability mechanism in the Act is the requirement that incorporated
societies provide the Registrar of Incorporated Societies with art
annual report. At the time that the fieldwork for this report was
undertaken, this had not occurred for three years, although the
Registrar had recently requested a report. It is interesting that it had
taken the Registrar this long to notice that a report had not been
provided.

Another mechanism for accountability to society as whole is
individual membership in VIP. In theory, people can express their
interest in VIP and its objectives by becoming members. If VIP had a
broad-based membership, the views of the wider community could be
expressed through the annual general meeting and the election of
officers. This does not occur at present because the membership is small
and tends to be restricted to those who work for VIP in some capacity.
The fact that most of VIP's governing board is appointed also
reduces the impact of this method of accountability.

Aside from arrangements for accountability to funding bodies and
the accountability mechanisms that exist under the Incorporated
Societies Act, VIP does not have mechanisms for accountability to the
community as a whole. In general, involvement from the wider community
is not sought. This may reflect the sensitive and confidential nature of
the work undertaken by VIP. It may also reflect its overwhelming focus
on addressing the expectations of funding agencies.

CONCLUSION

This paper has argued consistently that non-profit organisations
ought to be accountable. This is especially the case where:

* they spend public money;

* they make claims of community responsiveness; and

* they have objectives that have implications for the community as
a whole.

A difficulty with holding non-profit organisations accountable is
that traditional understandings of accountability in organisations are
linked to ownership. Non-profit organisations do not have owners. This
paper has built upon Carver and Carver's (1996) concept of moral
ownership in arguing that non-profit organisations ought to be
accountable to their stakeholders.

A problem with applying stakeholder theory to non-profit
organisations is that stakeholder theory has developed primarily to
address accountability issues in for profit organisations. While there
is published work on accountability issues in nonprofit organisations
this work does not use stakeholder theory. This paper has sought to test
the applicability of stakeholder theory to non-profit organisations by
considering whether it leads to meaningful conclusions when applied to a
non-profit organisation in a real-life setting.

From a stakeholder perspective, an organisation consists of a
collection of groups and individuals who form a coalition to achieve
mutually desired outcomes. Anyone with an investment in an
organisation's success is a stakeholder. Organisations benefit when
the active and positive participation of all stakeholders is achieved.
Arguably, stakeholders have a right to participate in organisational
decision making because they have an investment in the organisation,
which may be financial or non-financial in nature.

The research reported on here has tested the usefulness of
stakeholder theory in nonprofit settings by applying it to a non-profit
organisation. This research has demonstrated the following:

* It is possible to examine meaningfully a non-profit organisation
using stakeholder theory.

* A typical list of stakeholders in a non-profit organisation is
different from a typical list of stakeholders in a for-profit
organisation.

* It is possible to describe those stakeholders and their interest
in the organisation.

* It is also possible to assess how the organisation manages its
relationship with its stakeholders and thereby assess how accountable
the organisation is to its stakeholders.

Two things are immediately apparent from the application of
stakeholder theory to VIP. Firstly, stakeholder theory is not the only
theoretical framework that leads to the conclusion that external parties
have a vital role in an organisation's success. Social systems
theory and feminism, both of which are used by VIP, also lead to this
conclusion. Secondly, however, stakeholder theory is the only approach
that systematically asks who has an investment in an organisation's
success and how they can be given a voice.

It is likely that accountability issues for non-profit
organisations vary considerably depending on the nature of their
business, their size, whether they contract with government, and a range
of other factors. What is required is further research to test the
stakeholder approach in a variety of non-profit organisations.
Nevertheless, the overall relevance of stakeholder theory to non-profit
settings has been demonstrated by this study.

It is apparent from this study that current thinking about
accountability in non-profit organisations is relatively
unsophisticated, as are methods for holding them accountable. The two
most sophisticated accountability regimes considered by this project
were:

* the Domestic Violence Act 1995; and

* the provider accountability regime operated by the National
Network of Stopping Violence Services.

Both of these regimes have strengths and weaknesses. The Domestic
Violence Act is a regime oriented primarily to the needs of government
funding bodies and only indirectly meets the needs of other
stakeholders. It provides considerable assurance of service quality, but
provides for little in the way of consumer or public input. It also
focuses strongly on compliance rather than on relationship management
and does not encourage dialogue with providers.

The National Network regime does a great deal to ensure that
providers of stopping violence programmes are ethical and competent.
Again, however, this model does not provide for consumer or public
input, except when persons wish to register a formal complaint.

Both the Domestic Violence Act and the National Network of Stopping
Violence Services are accountability mechanisms limited to a specific
industry, i.e. stopping violence services. Beyond this, and other
pockets of industry-specific regulation, the only accountability
mechanisms for non-profit organisations are those provided for in three,
now rather old, pieces of legislation: the Charitable Trusts Act 1957,
the Incorporated Societies Act 1908 and the Trustees Act 1956. The
accountability provisions of this legislative framework can be
summarised as:

* A requirement for the prudent management of financial resources
in the Trustees Act;

* A right in the Charitable Trusts Act for donors to challenge the
application of donated funds to purposes differing from the purposes for
which they were given; and

* Extensive protection of the rights of members of incorporated
societies.

It is not hard to see incorporated society members being in some
senses akin to owners, and the rights accorded to society members by the
Incorporated Societies Act are in many respects similar to the rights
accorded to shareholders under New Zealand's companies legislation.
This is consistent with the way accountability is seen as being linked
to ownership. Aside from this stakeholder group, however, the
accountability provisions in the legislative framework above are
extremely weak.

So does any of this matter? In many ways the importance of the
issues discussed in this paper are proportional to the importance of
non-profit organisations in the life of our communities. The greater the
influence that they have over our lives and the more public resources
with which they are entrusted, the more important it is that they are
accountable.

It would be clearly inappropriate to impose a complex and demanding
accountability regime on every non-profit organisation. Many are
essentially private organisations, e.g. family trusts and small
societies, such as clubs, run exclusively for the benefit of their
members. At the other end of the spectrum, funding bodies typically
impose accountability requirements as part of their funding contracts,
and this addresses accountability issues for the large number of
non-profit service providers that deliver services under contract to
government. However, there are many other non-profit organisations over
which the public and/or consumers should expect to be able to exercise
some influence.

I would argue that the legislative framework for non-profit
organisations in New Zealand should be overhauled, and this is
particularly important for the many non-profit organisations that are
not government funded. The public should be able claim transparency and
openness from organisations to which it donates money or other
resources.

(1) Acknowledgements

This paper is based on a dissertation completed as part of a
Masters in Business Studies at Massey University. The support of the
Ministry of Social Policy, the author's employer at the time the
work for this paper was undertaken, is gratefully acknowledged. The
author's academic supervisor, Pat Kelly, in the Department of
Management Systems at Massey University is also acknowledged for his
supportive and constructive supervision.

Considine, M. (2000) "Selling the unemployed: the performance
of bureaucracies, firms and non-Profits in the new Australian 'market' for unemployment assistance" Social Policy and
Administration, 34(3):274-295.